Question

Milly took a loan of N$900 with simple interest for as many years as the rate of interest. If she paid N$324 as

interest at the end of the loan period, what was the rate of interest?

Answer 1

Let's assume that the rate of interest is r (in decimals), and the time period is also r years. Then we can use the simple interest formula:

I = P * r * t

where I is the interest paid, P is the principal amount (the loan amount in this case), r is the rate of interest per year, and t is the time period in years.

Substituting the given values, we get:

324 = 900 * r * r

Simplifying, we get:

r² = 324/900

r² = 0.36

Taking the square root of both sides, we get:

r = ±0.6

Since the rate of interest cannot be negative, we can take r = 0.6. Therefore, the rate of interest is 0.6 or 60% per year.